A bill to provide for the issuance of educational savings bonds a portion of the interest on which is exempt from taxation, and for other purposes.

Amends Federal law to authorize the Secretary of the Treasury, with the approval of the President, to issue educational savings bonds, a form of non-transferable savings bond that: (1) pays interest only if redeemed after 12 months of issuance; and (2) ceases to bear interest at the end of the 20th year after issuance.

Amends the Internal Revenue Code to exclude from the gross income of an individual any interest on educational savings bonds redeemed within 300 months of issuance to the extent: (1) the aggregate face amount of the bonds is $2,000 or less; and (2) the interest is used to pay the higher education expenses (tuition, fees, books, supplies, meals, and lodging) of a dependent at either an institution of higher education or a vocational school.